The key market gauge for long-term Eurozone inflation expectations rise to the highest since 2015
If there’s one thing that the global energy crisis is sounding to markets, it is that inflation is going to run rampant in the months to come as we approach winter.
Energy commodities are surging and bond yields are rising everywhere, reaffirming the intense focus on the energy crisis to kick start the new week.
The chart above used to be a good indicator of euro sentiment in general but I would argue this is not the time to be searching for correlations. There are many other factors at play at the moment and one of that being that the ECB is still defiant in maintaining that inflation pressures are largely more transient in nature at the moment.
They are facing a big challenge in trying to stick with that narrative and I would expect policymakers to slowly concede ground to expect higher inflation to run through to at least the middle of next year.